View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
February 13, 2015updated 12 Apr 2017 3:54pm

UK government closes consultation on invoice assignment ban

A proposal to remove the ban on invoice assignment clauses in business to business contracts, was included in a Department for Business, Innovation and Skills (BIS) consultation.

By Sotiris Kanaris

A proposal to remove the ban on invoice assignment clauses in business to business contracts, was included in a Department for Business, Innovation and Skills (BIS) consultation which closed on 11 February.

The department assessed a proposal to nullify the ban on invoice assignments.

Invoice finance allows a business to assign the right to future payment of an invoice, known as trade receivable, to a finance provider in exchange for a loan up to the full value of the invoice.

Where businesses encounter bans on invoice assignment clauses they can still often obtain invoice finance by seeking waivers or work-arounds. But this can expose businesses to higher interest and administrative fees.

BIS proposed to remove bans on invoice assignments to business to business contracts only.

It did not suggest the removal of bans in financial service contracts. The department wrote: "We have no evidence to indicate that the problems encountered by small and medium sized enterprises accessing invoice-based finance extend to contracts for financial services. In fact we understand that some financial products would not be able to function without a ban."

The consultation highlighted the need to focus regulation on trade receivables, therefore it was proposed that bans should remain on tenancy agreements and contracts creating interests in land.

In addition, BIS supported that the nullification should not extend to exclusivity clauses for supply chain finance , as it would give security to supply chain finance providers on beneficial terms to both suppliers and debtors.

In order to protect the debtors, the department proposed that bans should not be removed to clauses in contracts which protect commercial confidentiality.

 

 

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Thursday. The leasing industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Leasing Life